A recognised Self-Regulatory Organisation (SRO) for Payment System Operators (PSOs) has to work towards establishing minimum benchmarks, standards and help instil professional and healthy market behaviour among its members, according to Reserve Bank of India (RBI).

As per RBI’s “Draft framework for recognition of a SRO for PSOs”, such an SRO shall promptly inform Reserve Bank about any violation of the provisions of the Payments and Settlement Systems Act that comes to its notice or any other regulation issued by RBI.

The SRO, which will serve as a two-way communication channel between its members and Reserve Bank, will investigate any matter referred to by RBI. It shall establish a uniform grievance redressal and dispute management framework across its members.

The SRO shall impart training to the staff of its members and others. It shall conduct awareness programmes for spreading safe digital transactions.

An SRO is a non-governmental organisation that sets and enforces rules and standards relating to the conduct of entities in the industry (members) with the aim of protecting the customer and promoting ethics, equality, and professionalism.

In its draft framework, the RBI emphasised that as the payment ecosystem matures and as the number of payments systems proliferate, it becomes necessary, in the interest of optimal use of regulatory resources, that the payments industry develops industry standards in respect of system security, pricing practices, customer protection measures and grievance redressal mechanisms.

While self-regulation would release regulatory resources that can be better focused on issues of systemic importance, it would, by virtue of being developed by the industry itself, be more appropriate and encourage better compliance, the central bank said.

As the industry is forced to think in terms of developing systems that conform to best international practices, the industry would be better served in global competitiveness, it added.

“It is therefore proposed to encourage the establishment of a SRO that will be responsible for setting and enforcing rules for PSOs,” the draft said.

The RBI called for public comments on the draft framework on or before September 15.

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